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Home News Russia budget deficit to reach 3.8% of GDP in 2015: minister

Russia budget deficit to reach 3.8% of GDP in 2015: minister

Published on 11/02/2015

Russia's budget deficit is expected to reach 3.8 percent of GDP in 2015, mainly due to the impact of falling oil prices, Economic Development Minister Alexei Ulyukayev said Wednesday.

“According to our calculations, the resulting deficit amounts to 3.8 percent of GDP,” Ulyukayev said after meeting with Prime Minister Dmitry Medvedev, quoted by Interfax news agency.

After keeping its budget largely balanced for many years, Russia is seeing its financial situation deteriorate because of Western sanctions imposed over the Ukraine crisis and the falling price of oil, its main source of revenue.

“According to our forecast, budget revenues will fall by 2.340 trillion rubles ($35.41 billion) — mainly due to oil and gas revenues (falling by) 2.2 trillion rubles ($33.27 billion),” Ulyukayev said.

The forecast is based on oil prices staying at $50 for all of 2015, while they stood at $55 per barrel in London on Wednesday, and on GDP contracting by 3.0 percent, after 0.6 growth in 2014. Inflation is predicted at 12 percent for this year.

Ulyukayev predicted a balanced budget in 2017 if oil prices reach $70 per barrel.

Finance Minister Anton Siluanov had in December predicted a budget deficit of 3.0 percent.

Ulyukayev said the budget deficit could be covered by the country’s reserve fund, which has been topped up by earnings from oil and gas sales in recent years.

Siluanov on Tuesday suggested that benefit payments and civil servant salaries should no longer be adjusted for inflation.

The government in January had announced a crisis plan that included a 5.0 percent cut in budget spending apart from the public sector and defence.